*obligatory not financial advice*
What is Geist Finance?
Geist Finance is one of the most used DeFi applications on the popular Fantom blockchain and provides its users with decentralized lending and borrowing for various cryptocurrencies.
The project was inspired by Aave, which is one of the biggest lending protocols and a basically a blue chip DeFi application. Both "Aave" and "Geist" mean "Ghost" in different languages and both platforms let you deposit funds to earn interest on them or use them as collateral to borrow different supported tokens that have less value than your collateral.
This a great tool for when you need money but don't want to sell an asset you are bullish on, or if you want to do leveraged trading by using your borrowed stablecoins to buy more tokens you are bullish on, or if you want to short a token by borrowing it, selling it and then buying back to pay your loan back at a lower price.
You need to pay your loan back with interest to get your collateral back. The interest is variable and depends on how much of the asset is being supplied vs how much is being borrowed. This interest is used to reward the providers of the borrowed cryptocurrencies. There is no schedule for paying back the loans, you can do it whenever you feel like it.
However, borrowing is not without risk, like I said before you need to provide a collateral that has more value than the tokens you are borrowing. This collateral is locked to ensure that you will pay back your loan eventually and should the value of your collateral fall so low that it’s at risk of no longer backing your loan soon, which can easily happen in the volatile crypto market, then your collateral will be sold automatically to pay your loan back.
There are plenty DeFi applications for lending like Aave, Compound and Venus. That is because they are useful and any bigger smart contract blockchain needs the services they provide for trading. Geist is bringing decentralized loans to the Fantom blockchain and is utilizing its low fees and high speed that are much better than Ethereum at the moment. It is currently 3rd most used dApp on Fantom and will likely to stay very relative in its ecosystem for a long time but there are also other lending protocols being built on Fantom.
One thing that differentiates Geist from other lending protocol is that the holders of the native token are earning a share of all the earned interest.
The GEIST Token
Geist Finance has a native cryptocurrency called GEIST. Oddly, the GEIST token holds no governance rights over the protocol, instead the token is earning a share of the collected interest. 50% of all interest that is paid is distributed to stakers of GEIST.
The token is also distributed to both lender and borrowers as incentive to adopt the protocol. Since less people are borrowing than lending, you are earning more GEIST by taking a loan than by depositing funds. The GEIST tokens that are earned that way are being vested for 3 months when you receive them, but you can withdraw them immediately if you accept a 50% penalty. People that want to stake their GEIST to earn their share of the interest can also lock their GEIST for 3 months to also earn the penalty fee for early withdraws. This ensures that most of the tokens go to long term supporters.
There is a max supply of 1,000,000,000 GEIST tokens. 40% are used for rewards for lenders and borrowers during the first 5 years, 20% are used for rewards for people that provide liquidity to the GEIST / FTM pair on SpookySwap for the first 5 years, 20% are reserved for airdrops and other incentives to related DeFi communities and 20% went to the team and is being vested for 1 year. Most of the supply is going to the users, which is great but the team controls most of it initially.
The value of the token depends on how many funds are borrowed in the Geist smart contracts, because the token holders will earn more rewards if more is being borrowed. It’s the main lending protocol on Fantom and will likely grow together with it. However, the lenders are only getting 50% of the interest, so after all of the GEIST tokens are distributed many users could want to move their funds to a different lending protocol to earn more and this would hurt the Geist Finance protocol. It’s also kind of odd that the token holders have no governance rights.
The only centralized exchange that has the GEIST token listed is MEXC Global, but you can buy it on the SpookySwap DEX too. You can use a MetaMask wallet to store you tokens and interact with the Geist Finance platform if you connect it to the Fantom blockchain.
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